When the Rockefeller Fund announced its plans to divest from fossil fuels, a light bulb went on for Sandy Emerson. Why couldn’t she divest, too?
It turned out she could. And so can you.
Sandy’s the head of the individual divestment campaign for Fossil Free California, so divestment is a subject near to her heart. While the organization does a lot of work to push public and private institutions to divest, it also encourages individuals to take action. That was the subject of a recent Fossil Free California event, Move Your Money: Divestment for the Rest of Us, where Sandy told us about her light bulb moment.
We’ve already covered some ways you can ensure your investment dollars aren’t supporting fossil fuels. This event got into the details of what you can do with your bank and credit cards.
Why make the move?
Apart from all their other problems, big banks are supporting fossil fuels in a big way.
This support is not only bad for our planet — it’s also extremely risky financially.
As the Rainforest Action Network puts it, “Financial institutions that support business-as-usual for the fossil fuel industry are placing their bets on companies whose long-term success depends on runaway climate change.”
If the companies our banks are investing in succeed, that will be disastrous for our planet, and for our well-being. If they fail, that won’t be so good for these banks — where a lot of us have our money.
David Elliston, a “DIY investor” and member of the Divestment team at 350 Silicon Valley, pointed out that our bank account balances are highly leveraged. The money you keep in a traditional big bank is lent out over 10 times. So even if your balance is small, you could be supporting dirty fossil fuels with it more than you think.
Deciding where to move your money
Do you have a sentimental attachment to your bank? Like many of us, Edie Irons had been with hers for so long that she felt a certain loyalty to it. But also like many of us, she felt she had to take action when she realized how much it was supporting fossil fuels.
Both David and Edie chose a local credit union as their new bank. Edie said that making the switch was so easy that she can’t even recall the details. She was also pleasantly surprised that her credit union offered benefits like delivering a car to her home for her to test drive.
It really can be simple to move your money to an institution that doesn’t support fossil fuels — and that will treat you better, too. These days, you have choices.
Credit unions are gaining traction. According to David, they serve 100 million members in the U.S., with over $1 trillion in assets.
Some reasons to switch to a credit union:
- They hire and lend locally.
- They have 2 – 4 times more free ATMs than banks.
- They tend to offer free checking, shared branches, and shared services.
- They’re insured by the National Credit Union Administration (NCUA), which is like the FDIC and backed by the U.S. government.
Just by switching to a credit union, you’ll be doing a lot to make your money more sustainable.
If you want to go a step further, you can look into a credit union focused on community development.
Annie McShiras of Self-Help Federal Credit Union explained that community development credit unions were created to serve low-wealth and underserved communities. Unlike most credit unions, these institutions are nonprofits.
Nationwide, Annie said, there are 280 community development credit unions, out of 1100 community development financial institutions. Self-Help Federal Credit Union specializes in consumer protection and minority communities. They fight predatory lending, invest in communities that banks fail to serve, and foster ownership by communities of color. They’ve invested $7 billion in loans since 1980.
Socially responsible banks
Another way to take it up a notch is by moving your money to a socially responsible bank. This is a relatively new breed in the banking world, David said. If you’re interested in this route, he recommended looking for a bank that’s a B Corp or a community development bank.
One that’s been getting a lot of notice in our neck of the woods is Beneficial State Bank. Maritessa Bravo Ares, who works at the foundation that owns the bank, said Beneficial serves as a tool for social and environmental change.
Banking, she noted, is the “original form of crowdfunding.” And valued at $16 trillion, it makes up the bulk of our economy. So that money should be doing more, Maritessa said. It should be helping us.
Beneficial walks this talk. As a B Corp, Beneficial’s ownership structure prioritizes people and planet, and doesn’t maximize profit. Money from the bank goes back to the communities it serves, with loans that support environmental sustainability, affordable housing, and more. A full 10% – 15% of the bank’s profits go to the community.
How much does Beneficial State Bank give to fossil fuels? $0.
Breaking up with your bank is one important piece of the puzzle. Another is your credit card.
Green credit cards, like the banks we’ve covered, are not only better for our planet but also tend to give you better service.
Worried about losing all those airline miles you’re getting from your credit card? A credit union, David said, may have a better points deal than those mileage cards. Beneficial State Bank has affinity cards that provide revenue to a variety of environmental and social justice organizations.
Just like with banks, when it comes to credit cards, you have options.
How to move your money
We promised 50 ways to leave your mega-bank. We’re going to give you a lot more than that. As we said, you have plenty of options these days.
Finding the right credit union, bank, or credit card for you
Luckily, there are some great resources on all those options. Whether you want to look at your investments or just switch banks, we’ve got you covered. Here are a few great places to start:
- Break up with Your Mega-Bank. Green America’s comprehensive guide to switching banks and more. Their directory lets you find a bank, credit union, credit card, or loan that aligns with your values. There’s lots more there, too, if you want to take your breakup even further.
- Defund DAPL. A one-stop-shop for credit unions, banks, credit cards, and investing alternatives.
- Move Your Money. A resource for moving your money to a credit union.
- Credit Union Locator. A tool to find credit unions near you.
- Research a Credit Union. A place to get details about a specific credit union.
- Credit Union Finder. Another tool for finding credit unions, from WalletHub.
- Community Development Banks. A list of community development banks, which are FDIC-insured banks or thrifts that have a primary mission of promoting community development.
- Opportunity Finance Network. A national network of community development banks.
- Mazaska Talks (Money Talks). A campaign to defund the companies building DAPL, Keystone XL, and a few other pipelines, with a list of 64 banks that fund at least one of the pipelines.
- Fossil Free Funds. A search platform that lets you see if your individual investments or 401(k) are supporting fossil fuels.
- Extracting Fossil Fuels from Your Portfolio (PDF). A thorough guide to personal divestment and reinvestment.
Step-by-step guide to switching banks
If you decide to move your money to a new bank or credit union, it’s important to follow a few steps to make the switch simple and hassle-free. The Consumer Financial Protection Bureau suggests this process:
- Open your new account before you close your old one.
- Check your old account for any automatic deposits and withdrawals scheduled to go in and out of it each month — including any bills you pay automatically from your checking account. Make a list of these.
- Move only some of your money to your new account. Leave enough money in your old checking account to cover any checks that haven’t cleared or automatic payments that haven’t been made yet.
- If you have direct deposit for your paycheck or Social Security payments, fill out any paperwork needed to reroute those payments to your new account.
- Once your direct deposits are going to your new account, set up any automatic deposits and withdrawals (from the list in step 2) to be made from your new account. Then, cancel those deposits and withdrawals from your old account.
- When you’re sure that all direct deposits and automatic payments are coming into and going out of your new account, transfer the remaining funds from your old checking account to your new account. The fastest way to do this is electronically or with a cashier’s check. You can also do it with a personal check, but you may have to wait longer before it’s available in your new account.
- When you’re sure those remaining funds have been transferred to your new account, close the old account. Get written confirmation that the account has been closed. Bonus points: Let your old bank know why you’re moving your money! You can use Green America’s sample letter.
What about my credit score?
You might be holding back on switching credit cards because you’re worried about a hit to your credit score.
This is a valid concern. Your credit score will drop if you:
- Reduce your total credit across all cards.
- Use over 33% of your available credit.
- Open several credit cards over a short period.
The answer? Move your credit cards slowly. You will see a dip in your credit score, but it will rise again in a few months. If you’re planning something that requires a high credit score, like a house purchase, you can simply wait till that’s done to begin the process.
A handy tool for tracking your credit score is Credit Karma.
Will I make a difference?
As Nicole Ghio of the Sierra Club emphasized, divesting does make an impact. Banks are paying attention, she said. Some European banks are even selling their shares in the Dakota Access Pipeline, and reviewing their fossil fuel investments. The movement is spreading.
Money talks — and you have the power to make a difference. When we all work together, our small actions add up to an epic effect. So why not make the move now? You’ll sleep better at night knowing that your money is supporting your values!
This article is meant as a general overview, and does not constitute financial advice. For advice on your specific situation, be sure to consult a finance professional.